Sono-Tek (US:SOTK)2022-05-24 17:53Financial Data and Key Metrics - Net sales for fiscal year 2022 increased by 16% to $17.1 million compared to $14.8 million in fiscal year 2021 [18] - Gross profit increased by 23% to $8.6 million, with gross profit margin rising by 310 basis points to 50.3% [19] - Operating income grew by 41% to $1.9 million, with operating margin increasing to 11% from 9% in the prior year [19] - Net income was $2.5 million, a 127% increase from $1.1 million in fiscal 2021, driven by higher operating income and PPP loan forgiveness [20] - Cash and cash equivalents increased by $2.1 million to $10.7 million, with no debt on the balance sheet [21] Business Line Performance - Alternative energy market sales grew by 72% to $3.7 million, driven by investments in clean energy sectors such as fuel cells and carbon capture [24] - Medical market sales increased by 29% to $4.3 million, supported by strong demand from China and North America [24] - Electronics market sales rose by 19% to $7.1 million, primarily due to a significant sale of a 6-axis robot in the semiconductor market [25] - Industrial market sales declined by 53% due to the absence of a large textile shipment from the previous year [25] Geographic Performance - 68% of sales originated outside the U.S. and Canada, up from 65% in the prior year [18] - APAC and EMEA regions showed growth ranging from 6% to 27%, while Latin America experienced a 10% decline in sales [29] Strategic Direction and Industry Competition - The company is focusing on expanding its capabilities in roll-to-roll product handling, which addresses approximately 15% of the global coating market [14] - Sono-Tek is targeting growth in microelectronics, clean energy, and medical devices, all of which benefit from its thin-film coating technology [12] - The company is shifting its SIC code to better reflect its technology instrumentation focus, aiding stakeholders in understanding its business [14] Management Commentary on Market Environment and Outlook - Management expects double-digit sales growth for the first quarter and the full fiscal year 2023, driven by strong demand in semiconductors, medical devices, and clean energy [16] - The company is optimistic about the clean energy sector, particularly with government investments in hydrogen and electrolysis programs [26] - Sono-Tek anticipates continued growth in its backlog, which increased by 38% to $5.3 million, driven by product line expansion and full system solution sales [30] Other Important Information - The company paid off its mortgage debt during the year and currently has no debt on its balance sheet [16] - Capital expenditures for fiscal 2022 were $386,000, focused on upgrading manufacturing facilities [21] Q&A Session Summary Question: Market Share and Ultrasonic Coating Equipment Market - The company has seen a shift from R&D-focused machines to larger, more complex production solutions, with 60% of machines now used in production environments [48] - Sono-Tek is focusing on capturing a larger share of the general coating equipment market by addressing customer needs with solutions like roll-to-roll technology [40][41] Question: Fuel Cells and Electrolyzer Markets - The technical requirements for coating equipment in fuel cells and electrolyzers are similar, but the process expertise varies, requiring customized solutions for each application [45] - Fuel cells are in a more mature stage, while carbon capture and electrolyzer applications are still in R&D and pilot phases [47] Question: Customer Diversification - The clean energy sector is seeing an influx of new companies, while the semiconductor and medical markets are dominated by repeat customers from large multinational companies [54][55] Question: Capital Expenditure and Manufacturing Equipment - The company expects a slight increase in CapEx for the coming year, focusing on automation and efficiency improvements to accommodate growth [68][70] - Sono-Tek is investing in advanced manufacturing technologies to maintain its competitive edge in ultrasonic spray systems [71][72]